Indiana University Increasing Student Loan Debt: Learning from the Past and Present to Address the Future

Indiana University Increasing Student Loan Debt: Learning from the Past and Present to Address the Future

Presenters Roy Durnal David Johnson Director, Student Services Center Vice Provost for Enrollment Management Indiana University Indiana University Student Services Building Student Services Building 408 N. Union St. 408 N. Union St. Bloomington, IN 47405 Bloomington, IN 47405 812-855-8258 812-855-8908 rjdurnal@indiana.edu vpem@indiana.edu Mercedes Randall Director, Administration & Fiscal Affairs Indiana University Student Services Building 408 N. Union St. Bloomington, IN 47405 812-856-3031 mrandall@indiana.edu

Indiana University IU System Enrollment (Fall 2012) - 110,393 Indianapolis (IUPUI) 30,451 East (IUE) 4,186 Fort Wayne (IPFW) 8,326 Kokomo (IUK) 3,719 Northwest (IUN) 6,184 South Bend (IUSB) 8,490 Southeast (IUS) 6,840 Bloomington Campus Carnegie Class - Research I Founded 1820 Enrollment 42, 133 Undergraduate 32,371 Graduate 9,762 New Beginners (2012) 7,613 Residents (Beginners) 61.7%

National Pressures From the Bloomington Herald Times to the New York Times, the issue of affordability in higher education has had a tremendous amount of focus. Maguire Associates, in May 2012, stated that the college decision is an investment and values decision, not just a pricing decision. The value proposition is unique for each individual. Is the return on investment worth the cost?

National Pressures, Continued Compared to other large investments that Americans make, the information that prospective students have about college costs and quality is woefully incomplete. (Source: Andrew P. Kelly, for the Atlantic, September 26, 2011, sited by Heather Zimar, AACRAO) Affordability is unavoidably subjective and is dependent on the net price students pay and the return on their investment in regards to their career and lifetime. (Source: Sandy Baum and Saul Schwartz, Institute for Higher Education Policy, Is College Affordable? In Search of a Meaningful Definition. July, 2012)

State Pressures Indiana Commission for Higher Education (ICHE) Public Opinion- challenging college is worth it due to rising cost, growing student debt, and inability for college graduates to find jobs ICHE stresses college is worth it Indiana residents with only HS diploma are three times more likely to be unemployed today Average student debt upon graduation is more than $27,000 and student loan default rate has increased by 35% over the past 3 years Average tuition and fees at Indiana s public colleges has increased by nearly 100% since 2000 Source: 2013 State of Higher Education Address

Board of Trustees Affordability Loan Debt Financial Literacy IU Pressures Faculty - Bloomington Faculty Council Same Issues as above Senior Administration Strengthen Advising and Career Services which add value to the student experience Students - Activism IU on Strike

Cost of Attendance 2012-2013 Resident Nonresident Tuition & Fees $10,034 $31,484 Room & Board $ 8,854 $ 8,854 Books & Supplies $ 848 $ 848 Transportation $ 860 $ 860 Personal & Misc. $ 2,522 $ 2,522 Cost of Attendance $23,118 $44,568

Big Ten Cost of Attendance $35,000 2012-2013 Resident COA $30,000 $25,000 $20,000 $15,000 2012-2013 Resident COA $10,000 $5,000 $0 1 2 IU 4 5 6 7 8 9 10 11 12 As reported by College Navigator

Net Price Net Price - College Navigator defines the average net price as the difference between the total cost of attendance and the average amount of federal, state, and institutional grant or scholarship aid received by residents.

Average Net Price National average net price for beginning resident students at 4-year public institutions in 2010-2011 was $10,471* Indiana University Bloomington average net price for beginning resident students in 2010-2011 was $10,324* Within the Big Ten** the average net price for beginning resident students in 2010-2011 ranged from a low of $10,324* to a high of $21,342* *as reported by College Navigator **not including Northwestern University - private

Big Ten Average Net Price $25,000 Average Net Cost $20,000 $15,000 Average Net Cost $10,000 $5,000 $0 IU 2 3 4 5 6 7 8 9 10 11 12 Source: College Navigator

Percentage of Seniors Graduating with Student Loan Debt 53%* of seniors graduating from Indiana University Bloomington in 2011 had student loan debt** Within the Big Ten the percentage of seniors graduating in 2011 with student loan debt** ranged from a low of 44%* to a high of 66%* *as reported by the Project on Student Debt **loan debt includes federal and private student loans

Big Ten Percentage of Graduates with Student Loan Debt 70% Percentage of Graduates with Loan Debt 60% 50% 40% 30% Percentage of Graduates with Loan Debt 20% 10% 0% 1 2 3 4 IU 6 7 8 9 10 11 12

Average Student Loan Debt National average student loan debt* for students earning a bachelor s degree and graduating in 2011 was $26,600** Average student loan debt* for seniors graduating from IU Bloomington in 2011 was $28,434** Within the Big Ten the average student loan debt* for graduating seniors ranged from a low of $21,604** to a high of $33,530** *loan debt includes federal and private student loans **as reported by the Project on Student Debt

Big Ten Student Loan Debt $40,000 Average Loan Debt $35,000 $30,000 $25,000 $20,000 Average Loan Debt $15,000 $10,000 $5,000 $0 1 2 3 4 5 6 7 8 9 IU 11 12

Student Loan Debt Study - Facts Nationally Student loan debt over $1 trillion Value of college education? Education bubble College degree premium Still a good investment One in five households owed SLD in 2010 Rising student debt to income ratio

IUB Student Loan Debt Study: Predictor Variables General Research Question: What are the variables influencing (predicting) the amount of loan debt of students from their freshman cohort through graduation date? Source: IU OEM Study, December 2012

Student Loan Debt Study - Findings Coefficients a Unstandardized Coefficients Model B Std. Error Beta Standard. Coefficients t Sig. 95.0% Confidence Interval for B Lower Bound Upper Bound Correlations Zeroorder Partial Part 1 (Constant) 32086.78 15288 2.099 0.036 2116.47 62057.09 ResideCode 1784.58 784.4 0.031 2.275 0.023 246.838 3322.318 0.02 0.031 0.028 a Depend Variable: Loans GenderCD -768.97 775.4-0.013-0.992 0.321-2288.982 751.052-0.008-0.014-0.012 Age 379.58 646 0.007 0.588 0.557-886.832 1645.981 0.006 0.008 0.007 SAT 2.52 3.129 0.014 0.805 0.421-3.614 8.652-0.002 0.011 0.01 HSGPA -2261.43 1318-0.06-1.716 0.086-4845.257 322.39 0.006-0.023-0.021 IUGPA -336.96 1051-0.005-0.321 0.749-2397.523 1723.6-0.003-0.004-0.004 GradCD -844.74 910.8-0.013-0.928 0.354-2630.219 940.736-0.029-0.013-0.011 PAGICD -1039.17 405-0.078-2.566 0.010-1833.217-245.13 0.369-0.035-0.031 Scholarships -0.33 0.02-0.238-16.919 0.000-0.373-0.295-0.112-0.224-0.206 Business 1927.98 913.5 0.032 2.111 0.035 137.175 3718.774-0.011 0.029 0.026 UDiv 4825.05 1111 0.061 4.343 0.000 2647.194 7002.902 0.024 0.059 0.053 Education 8310.24 1924 0.056 4.32 0.000 4538.836 12081.64 0.045 0.059 0.053 Black 450.59 1820 0.003 0.248 0.804-3116.918 4018.101 0.003 0.003 0.003 Latino -887.87 2242-0.005-0.396 0.692-5283.586 3507.855-0.012-0.005-0.005

Student Loan Debt Study Findings, Continued The predictors with the highest statistical significance at α = 0.10 were Schol, PAGICD, HSGPA, and ResideCode Schol For every additional dollar in Scholarships, the student loan decreases by 33 cents PAGICD For every additional level in AGI, the student will require $1,039 less in loans HSGPA For every additional point in the GPA score, the student will require $2,261 less in loans ResideCode One additional unit, loans go up by $1,785

Financial Literacy Initiatives at IU University Office of Financial Literacy created in July 2012 as an institutional level department reporting to the Office of the Treasurer Financial Literacy Liaison Committee includes representatives from all campuses to assist with campus financial literacy programs Personal Financial Manager Certification individuals at each campus have received formal training as a personal financial manager

Financial Literacy Website

Upcoming Financial Literacy Initiatives Support financial literacy through First Year Experience programs Student workshops on various financial topics Online financial literacy tutorial will be required for all new freshmen Three separate one credit hour financial literacy classes will be taught online by Kelley School of Business faculty Student peer to peer advising program

Office of Enrollment Management Initiatives Continue to support and advocate for institutional financial aid, particularly for diverse and underrepresented populations New Scholarships Strategy Intersection of Need & Merit Aid Active collaboration with campus partners

Student Loan Debt Letter

Summer Tuition Discount Program

Summer Tuition Discount Program Indiana resident undergraduate students get a 25% discount on summer tuition rate on classes taken at any IU campus Nonresident undergraduate students receive an dollar reduction to their summer tuition rate that is equivalent to the 25% reduction received by resident students A summer only program introduced in summer 2012 as a two year pilot

Finish in Four On-Time Completion Award

Finish in Four On-Time Completion Award The award offsets any tuition increases for juniors and seniors who meet credit hour benchmarks to graduate in four years Students must have started at IU as a freshman and be in their third or fourth year of study An academic year award introduced in fall 2013 as a two year pilot program

Conclusion - Takeaways Understanding the Cost & Value Proposition Issues Cost Net Price Loan Debt IU Solutions Financial Literacy Summer Tuition Discount Finish in Four On-Time Completion Award Continue to Balance Merit and Need Based Aid as we seek to help students to afford an IU education

Questions?